Tag Archives: deficits

The Trump administration proposed a spending plan on Monday that projects deficits as far as the eye can see, giving up the longtime Republican goal of a balanced budget to champion a spending plan replete with cash for a host of military programs and some domestic ones the president’s supporters might admire.

The budget calls for about $716 billion in annual defense spending, more than $100 billion above the level Trump requested last year. Add in the tax cut Republicans pushed through in December and the extra spending Congress approved just last week, and the result is a flood of red ink projected to send the national debt ever higher.

Trump’s budget anticipates deficits throughout the next 10 years even if Congress were to approve some $3 trillion in cuts over that same time period that he’s proposing for a wide range of federal programs. Both parties already rejected most of those cuts last year and have shown little interest in pursuing them.

The deficits persist even though the White House is forecasting extremely optimistic levels of economic growth. If growth falls short of those projections — most economists think it will — deficits would be higher still.

As a result, the budget marks something of a milestone — the Trump administration’s abandonment of the quest for budget balance that the Republican Party has claimed as a guiding light for years, at least rhetorically.

In reality, deficits have often soared under Republican presidents as the party has put cutting taxes ahead of balancing budgets on its list of priorities. In the past, however, Republican administrations have taken pains to at least come up with a budget that would balance on paper.

A Republican requirement that Congress consider the full cost of major legislation threatened to derail the party’s $1.5 trillion tax rewrite last week. So lawmakers went on the offensive to discredit the agency performing the analysis.

In 2015, Republicans changed the budget rules in Congress so that official scorekeepers would be required to analyze the potential economic impact of major legislation when determining how it would affect federal revenues.

But on Thursday, hours before they were set to vote on the largest tax cut Congress has considered in years, Senate Republicans opened an assault on that scorekeeper, the Joint Committee on Taxation, and its analysis, which showed the Senate plan would not, as lawmakers contended, pay for itself but would add $1 trillion to the federal budget deficit.

Public statements and messaging documents obtained by The New York Times show a concerted push by Republican lawmakers to discredit a nonpartisan agency they had long praised. Party leaders circulated two pages of “response points” that declared “the substance, timing and growth assumptions of J.C.T.’s ‘dynamic’ score are suspect.” Among their arguments was that the joint committee was using “consistently wrong” growth models to assess the effect the tax cuts would have on hiring, wages and investment.

The Republican response points go after revenue analyses by the committee and by the Congressional Budget Office, which scores other legislation, saying their findings “can be off to the tune of more than $1.5 trillion over ten years.”

The swift backlash helped defuse concerns about the deficit impact long enough for the bill to pass by a vote of 51 to 49. Some deficit hawks in the Senate caucus were sufficiently concerned about the report on Thursday night to delay the tax vote by a day, but the only Republican lawmaker to vote no was Senator Bob Corker of Tennessee, whose last-minute efforts to cut the size of the package or otherwise offset the deficit impact were unsuccessful.

Instead, Senate Republicans questioned the timing of the analysis’ release on Thursday, and a spokeswoman for the Senate Finance Committee released a statement saying the findings are “curious and deserve further scrutiny.”

That sentiment was repeated over and over, before and after the vote. “We think they lowballed it,” Senator John Cornyn of Texas, the majority whip, told reporters on Thursday. On Sunday, Senator Tim Scott of South Carolina said on CNN that “there’s no doubt that the J.C.T. has been consistently underestimating the activity in our economy.”

In the final hours before and after the bill passed, party leaders insisted that the tax plan would produce enough economic growth to pay for themselves with additional tax revenue from growing businesses and higher-paid workers. “I’m totally confident this is a revenue-neutral bill,” Senator Mitch McConnell of Kentucky, the majority leader, told reporters early Saturday morning after the vote. “Actually a revenue producer.”

Yet there was no data to support those claims, despite promises by the Trump administration that such an analysis would be forthcoming. The Treasury, whose secretary, Steven Mnuchin, has said repeatedly that his department was working on an analysis to show how the tax cuts would not add to the deficit, has not produced any studies that back up those claims. Last week, the Treasury’s inspector general said it was opening an inquiry into the department’s analysis of the tax plan.

The attack on the joint committee and its analysis is a change from the praise Republicans have long heaped on the body, which is staffed with economists and other career bureaucrats who analyze legislation in depth.

“The people who prepare our cost estimates are the best in the business,” Republicans on the House Budget Committee said on a page that has since been removed from their website, “and they’ve been working on this issue for years.”

After weeks of intense and bitter negotiation, the so-called “Supercommittee,” the special Congressional Committee charged by President Obama to find a bipartisan plan for reducing the budget deficit, has failed to reach a compromise. Last week Democratic members of the committee were hopeful that one Republican would agree to support a tentative bipartisan package that includes agreements on tax rates, spending cuts, and changes to entitlement programs such as Social Security and Medicare.

Democrats blame Republicans for refusing to compromise on either tax rates or tax increases, while Republicans blames Democrats for not proposing serious cuts that bring federal spending into line with their ideological vision of smaller government. Democrats claim that Speaker of the House Jim Boehner (R-OH) killed the hard efforts of the panel on Thursday by offering legislation to increase new revenue by $3 billion in new revenue, which would be devastating to entitlement programs millions of Americans rely on.

Both parties are stuck on the question of tax reform because Democrats rightly believe that the wealthy have benefited too much from the climate of deregulation and corporate malfeasance, and as a result should pay their fair share in a system they exploit and profit from. Republicans are sticking to their long-time (and patently false) position that taxes frustrate economic growth and spur entitlement spending. In short, Democrats believe in the Grand Compromise between democracy and capitalism first initiated by President Franklin Roosevelt’s New Deal, while Republicans believe in every man (literally) for himself.

The failure of the committee to reach a compromise agreement is troubling for the anemic economy, and signals that the bipartisan rhetoric of both Democrats and Republicans cannot be trusted. Yet the elephant in the room is that Republicans care little about a healthy, functioning government and want to substitute private decision-making for democratic procedure. Economists of all political persuasions are in agreement on this point: there can be no serious deficit-cutting proposal that does not both cut entitlement spending and raises taxes. The gap is too large and growing larger daily, so President Obama must find a way to tap into the political energy unleashed by the Occupy Wall Street movement, and demand that Republicans give up their fantasy of a tax-free world. It’s high time everyone paid their fair share, including Republicans and their rich and powerful benefactors.